15 July 2026 · Output Tax
Credit Notes on Pre-Exit Supplies
If a supply that the VAT group previously reported is later cancelled, returned, discounted or repriced after you have left the group, you make the output tax adjustment in your own return. Article 61 of Federal Decree-Law No. 8 of 2017 lists the instances that require an adjustment — the supply being cancelled, its tax treatment changing, the consideration being altered, goods being returned, or tax charged in error — and Article 62 sets the mechanism: you issue a tax credit note within 14 days and reduce output tax by the credited VAT. FTA Directive No. 2 of 2026 confirms that, once you have left but remain registered, this reduction is reported in your own VAT return, not the former group's. The credit note is issued in your name, referenced to the original supply, and kept with the original tax invoice as evidence.
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When output tax drops after exit
Article 61's instances do not stop applying because you changed registration. If a pre-exit sale is cancelled, the goods come back, the price is cut, or VAT was charged in error, an output tax adjustment is required. What the Directive settles is that the adjustment is now yours to make, in your own return, for supplies the group had reported.
- Supply cancelled or contract terminated.
- Goods returned and the consideration refunded.
- Price reduced or a post-sale discount given.
- Tax charged, or a tax treatment applied, in error.
- The event occurs after your exit date.
- The original supply sat in the group's return.
A credit note in your name
Article 62 requires a tax credit note within 14 days of the adjustment event, carrying the contents set by Article 70. It must reference the original tax invoice, show the corrected values and the VAT reduction, and be issued under your own registration. You then reduce output tax by the credited amount in the return for the period the note is issued.
- Issue a tax credit note within 14 days.
- Include the Article 70 required contents.
- Reference the original tax invoice on the note.
- Show the reduced value and the VAT credited.
- Issue it under your own TRN after exit.
- Reduce output tax in that period's return.
AED 200,000 returned
Company B left its group on 31 July 2026. A June sale of AED 800,000 (AED 40,000 VAT) sat in the group's return. In September a customer returns AED 200,000 of goods. B issues a credit note, reduces output tax by AED 10,000, and reports that reduction in its own September return — not the group's. The original invoice, the credit note and the group return are filed together.
- Original sale: AED 800,000, AED 40,000 VAT.
- Return: AED 200,000 of goods in September.
- Credit note VAT: AED 10,000 (5%).
- Reported in B's own return, not the group's.
- Evidence: invoice + credit note + group return.
- Timing: within 14 days of the return.
Related guides
Frequently Asked Questions
For output tax adjustments.
How long do I have to issue a credit note?
Within 14 days of the adjustment event, under Article 62 of the VAT Decree-Law. The note must reference the original tax invoice.
Which return does the reduction go in?
Your own return, once you have left the group but remain registered — in the tax period the credit note is issued.
What triggers the adjustment?
The Article 61 instances — cancellation, change of tax treatment, altered consideration, return of goods, or tax charged in error.
Do I need the original invoice from when I was grouped?
Yes. Keep the original tax invoice, the credit note and the relevant group return so you can prove the adjustment ties back to a supply the group reported.
Can Exiloz prepare the credit notes?
Yes. We issue compliant tax credit notes, reference them correctly and post the output tax reduction to the right return.
Need a post-exit credit note?
Exiloz issues and posts your output tax adjustments correctly.